Small business owners consider bookkeeping as a burden and often end up ignoring its importance till the financial year comes to an end. To make this essential procedure easier, this article brings about certain hacks which small businesses can follow so as to simplify their procedure of accurate bookkeeping.
Running a small business essentially requires accurate bookkeeping. Bookkeeping helps small businesses to keep track of their incoming and outgoing transactions. This helps in realizing the revenue earned by the business and the expenses incurred. Proper maintenance of financial records also reduces the risk of committing financial fraud. Auditing becomes easy for the business which ensures that tax is paid accurately and no fraud is invited.
Although the task may seem like more of a chore, it becomes extremely significant for small businesses to maintain correct books of account. Therefore, we bring to you certain hacks to bookkeeping which can make it easier for small businesses.
The following are some of the ways using which small businesses can simplify their bookkeeping:
- Open a Separate Bank Account for Business: Opening a separate bank account and a credit card account for your business will help in simplifying the bookkeeping process. This is because it will separate personal and business transactions which will help you in differentiating between the two and keeping track of the business transactions. The transactions in a separate business account will be oriented around the business which will help in administering the expenses. Using the account statement of the business’ bank account, you can maintain accurate books of account. Based on your business’ revenue, transaction volume, etc. choose a viable option in a reputed bank. Henceforth, get in touch with an advisor and submit the required documents to open a new bank and credit card account for your small business.
- Keep Track of Business Expenses: Accurately tracking the expenses of your small business will build a strong foundation for its bookkeeping. Allocate correct financial information, track the tax liabilities, maintain your finances in real-time, and build accurate financial statements. Maintenance of accurate finances will ensure reduction in the payable tax return fee because the accountant will consume less time in preparing the final returns for the business.
- Payroll Simplification: Automation of payroll can greatly contribute in simplifying the bookkeeping process of the business. There are various software applications for the same which automatically pay the employees and contractors of the business in a timely manner as per the country’s regulations. A simplified automated payroll system can help streamline the outgoing transactions of a business in a more accurate manner than manual bookkeeping.
- Receive Payment Faster: An increasing number of sales made by your business may demand a more organized payment system. Going for an automated payment processing system will prove to be the most suitable option for making payments more efficient. There are various software applications which may prove to be viable options for processing payments. In order to choose the right application to process your payments, keep in mind your clients and their preferences to pay for your goods and services. On the basis of these details you may select a software application which matches your interests and your customers’ interests for simplifying the payment process. This will streamline the customer to business transactions further and help in organized and accurate bookkeeping.
- Regularly Review Your Bookkeeping: Keep updating and reviewing your bookkeeping processes so that it can be simplified more accurately. Bookkeeping will reflect your business’ financial status. Therefore, keep reassessing and reviewing your bookkeeping processes with the increase in operations to maintain accurate records. This will help in better analysis and evaluation of your business reports which will further simplify bookkeeping. You may also outsource the bookkeeping process to service providers or software applications which offer bookkeeping services. This will help in further simplifying bookkeeping processes for your small business.
- Improve Your Financial Knowledge Continuously: It is important for business owners to have a deep and updated knowledge about the finances of their business. This helps in operating the business better as it brings to perspective the things which have and have not proven to be profitable for the business in the past. The owners can also analyze their finances and predict the future if they are well-informed financially. Owners should at least have a sufficient understanding of financial concepts like balance sheets, tax liabilities, cash flow statements, business margins, and business costs. This will help them in making right decisions based on facts and figures instead of mere hunch. Financial literacy is something which should be developed continuously with the help of an accountant or a knowledgeable bookkeeper, if not by self. Various other resources are available to stay up-to-date with one’s business finances and its concepts. The business owner’s financial literacy will help in growing the business more efficiently by avoiding any frauds from occurring, which can thus prove to be the best investment ever made in the business.